31, never married and no kids. No debt, but credit-less. Looking to build a financial foundation within my first contract and become “set”.
Do I invest? If so, where? I’ve had the idea that the Big 5 defense contractors would be a decent start.. anywhere else??? No interest in real estate (please try to prove me wrong). Precious metals?? I understand things like this is a numbers and waiting game. Thank you for your time and advice in advance.
Enlisting soon, wanting to build a solid nest egg. Any/all advice appreciated.
byu/brocephus666 inMilitaryFinance
Posted by brocephus666
3 Comments
Do 5% into your TSP for the match. Do the C fund or whatever is the S&P 500. Open up an IRA with whatever brokerage, I have fidelity. Invest in their S&P 500 index fund or just VOO. Max that if you can. If you still have more to save I’d say open a brokerage account as well for your gambling investments or throw more into TSP.
https://www.reddit.com/r/MilitaryFinance/s/Mo8NYQVS3I
It’s right here
Do not invest in the Big 5 Defense companies or precious metals.
First things first, get a credit card. Just a simple, catch-all card like a Discover It card or a Wells Fargo Active Cash. Spend on it like you normally would and pay it off in full. Credit is a numbers and waiting game, the faster you try to move it along the slower it will take.
Set your TSP to 5% as soon as you’re able, probably at some point early on in basic training. At 5% you will utilize the full government match meaning that you will be getting money on top of the amount being deducted into your TSP account. I would also look for a specific guide as to which funds you should invest in via TSP given your risk tolerance, alongside weighing the benefits of a Roth or Traditional TSP.
Make sure that you have a savings pot. Nothing crazy, especially if you’re single and going active (living in the barracks). 6 months worth of expenses is what I always lean on, and you will likely leave IET with significantly more than that.
From there, I recommend a Roth IRA. Each year you can put $7000 in a tax-advantaged account where it can be invested. Personally I invest mine into S&P 500 index funds such as VOO or VTI and would be happy to elaborate on that decision as well as how I invest my TSP, but some people get weirdly defensive over exact splits or specific funds, so I leave that to reader discretion/research.
Now is the fun part. It’s all about you and your goals. At this point you are a lower enlisted guy who is getting his credit rolling, has a fully stocked emergency savings account, and is getting starting on retirement savings. If you want to start saving for life (house, kids, etc.), this would probably be where you direct most of the rest of your income. If retirement is your main goal, then increasing your TSP contribution percentage is essential. As a lower enlisted it’s unlikely you will be able to do just about anything else if you max your TSP, so either use that as motivation to move up in rank or accept that fact that over 90% of your income is tied up in something you can’t touch for 30 years.